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The Fatal Pinch

paulgraham.com

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Re: The Fatal Pinch

#21

Post by mamcx »

paul wrote: post #10
joshu wrote: post #6

This is why I hate investing in startups raising $500k or less. You won't be able to raise again unless you have significant upwards progress.

Several of my best investments have been from startups raising less than $500k. Justin.tv/Twitch returned 97x my original investment, and Weebly will likely be even more.

Probably is easier to be frugal with limited resources. With a lot, is easier to overspend at first and later get burned. Limited resources from the star could help to focus more.

I have never get investment (rarely in my country) but always thinking that I prefer a small push than a huge one.

Re: The Fatal Pinch

#22

Post by sama »

joshu wrote: post #6

This is why I hate investing in startups raising $500k or less. You won't be able to raise again unless you have significant upwards progress.

on the contrary, most of my best investments have been in rounds of <$500k. i'm more afraid of startups raising megarounds as their initial round.

Re: The Fatal Pinch

#24

Post by michaelbuckbee »

super_sloth wrote: post #8

"Although your product may not be very appealing yet, if you're a startup your programmers will often be way better than the ones your customers have or can hire." Is this really true? I'm very sceptical. Does anyone have any evidence to back this up?

It would probably be fair to rephrase it as "specialized" instead of "better". If you're a company making widgets that spends $50,000 a month on Adwords - a startup building Adwords optimization products could likely build you a custom Adwords tool fasther+cheaper than an internal team.

Re: The Fatal Pinch

#27

Post by jonathanmarcus »

paul wrote: post #10
joshu wrote: post #6

This is why I hate investing in startups raising $500k or less. You won't be able to raise again unless you have significant upwards progress.

Several of my best investments have been from startups raising less than $500k. Justin.tv/Twitch returned 97x my original investment, and Weebly will likely be even more.

Weebly's traction and capital efficiency are remarkably impressive.

Re: The Fatal Pinch

#28

Post by kenrikm »

sama wrote: post #22
joshu wrote: post #6

This is why I hate investing in startups raising $500k or less. You won't be able to raise again unless you have significant upwards progress.

on the contrary, most of my best investments have been in rounds of <$500k. i'm more afraid of startups raising megarounds as their initial round.

In the current climate what would you recommend the size of a seed round be? Clearly the answer is not "as much as you can get" right?

Re: The Fatal Pinch

#29

Post by gtremper »

TheBiv wrote: post #3
carsongross wrote: post #2

One way to avoid the fatal pinch is the Dickens approach: Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery. In a world with AWS and pay-as-you go services, it's more and more possible.

(Zero sarcasm) can you possibly explain, in different words, what this means?

Its like gold, silver, copper in fantasy RPGs

Re: The Fatal Pinch

#30

Post by kenrikm »

paul wrote: post #16
super_sloth wrote: post #13

Earlier quoted context omitted.

Presumably those were a while back? Do you think the climate has changed since then to make it much harder?

The climate has changed in that it's easier for startups to raise more, but even those that do not can still be very successful. Justin.tv or Weebly would not require any more money to start today than they did six years ago -- if anything it's gotten cheaper.

I remember David from Weebly noting that they narrowly avoided the pinch by becoming profitable (circa 2009?) Now AFAIK they are kicking ass.
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